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The Arab region continues to be one of the most unequal regions worldwide. As poverty rises, the growing wealth gap between individuals fuels increasing inequality. The region exhibits persistent and increasing levels of inequality in opportunity, especially among certain groups and in certain areas. For example, youth unemployment, which is 3.8 times higher than that of adult workers, has been the highest in the world for the past 25 years. Unemployment among certain groups, such as women and persons with disabilities, is even higher than that of men and persons without disabilities. Gender-based inequalities stubbornly remain above global levels. Wealth creation opportunities are declining, with the wealthiest 10 per cent of Arab adults holding 80 per cent of the total regional wealth. Such factors, if left unaddressed, will deepen existing inequalities, hitting the poorest and most vulnerable communities hardest. These factors risk inflaming greater disaffection and alienation among Arab populations, resulting in a breakdown of social cohesion. Furthermore, social, political and economic inequalities have amplified the impact of the COVID-19 pandemic, which disproportionately affected young people in the Arab region. The pandemic highlighted the economic inequalities and fragile social safety nets in the region, with vulnerable and at-risk communities bearing the brunt of the pandemic’s repercussions. Despite this bleak picture, Arab populations are optimistic and hopeful. A survey conducted by ESCWA found that 52 per cent of people in the region believe that equality exists, either fully or partially, while 47 per cent believe that equality will increase in the next five years. This optimism must be utilized. To seize this momentum, Arab Governments should not spare an effort to capitalize on youth enthusiasm, which can serve as a strong catalyst for change. This requires going beyond superficial and temporary fixes to fundamentally reform the root causes of inequality, including addressing structural challenges, corruption, governance and institutional deficits, and introducing coordinated economic and social policies. Notably, creating job opportunities was chief among the demands of those surveyed. Decent job creation is necessary to unleash the productive potential of young people, and avoid another “lost generation” with limited access to opportunities as it transitions into the labour market. Arab Governments must recognize that delivering visible impact, securing credibility, and promoting solidarity within the region constitute a successful three-pronged policy approach to reducing inequalities. Practical solutions should be put in place to translate this approach into practice, and ensure that benefits trickle down to those most in need. To kickstart this paradigm shift in policy reform, I propose establishing a solidarity fund and a regional coalition to reconnect different population groups across the wealthiest and poorest segments of society, so as to create opportunities to ensure dignified and prosperous lives for the poor and vulnerable, improve shared wellbeing, guarantee growth to build stronger and more stable societies that leave no one behind in the achievement of the SDGs, and promote shared responsibilities, societal solidarity and effective partnerships for development. We need to act now. Our children will never forgive us if the legacy they inherit is fragmented, fragile and marginalized societies.
Rola Dashti, Executive Secretary UNESCWA
Director, ESCWA Cluster on Gender Justice, Population and Inclusive Development
Since the outbreak of the COVID-19 pandemic, the Arab region has witnessed disparities that sharply contradict the vision of equality and inclusion inspired by the Sustainable Development Goals (SDGs). Many poor people in several Arab countries could not procure private medical care and consequently died of the virus, while others survived because they could protect themselves at home or access private health care. Around 8.8 million people became newly unemployed during the pandemic in the Arab region, while the wealthiest 10 per cent of the region’s population now control 81 per cent of its net wealth compared with 75 per cent prior to the pandemic. In 2023, an additional 10.9 million poor people in the region will fall into extreme poverty, 8.5 million owing to the impact of the pandemic and 2.4 million as a result of the war in Ukraine.
The present report builds on the increasing awareness among Governments and people of the importance of tackling inequality as a prerequisite for a just and peaceful society. It complements the Pathfinders flagship global report entitled From Rhetoric to Action: Delivering Equality and Inclusion.
Pathfinders, From Rhetoric to Action – Delivering Equality and Inclusion, 2021.
The present report also tackles the long-standing challenge of youth unemployment in the Arab region, which is one of the most enduring forms of inequality. Enhancing the status of young people and assimilating them into the labour market is crucial to reducing inequality, since young people (aged 15-29) represent about 30 per cent of the entire Arab population.
Prior to the COVID-19 pandemic, social protection systems in the Arab region were weak, fragmented, not inclusive and non-transparent. They were also costly and unsustainable. Underinvestment in these systems and exclusion of vulnerable populations were key challenges. Less than 30 per cent of the population in the Arab region were covered by social protection programmes.
Most social protection systems were funded through Government budgets or external assistance and not through contributions from beneficiaries or employers. The COVID-19 crisis spotlighted the problems of the social contract between people and Governments and presented a historic opportunity to address some of the challenges facing social protection systems. Lessons learned in various countries were identified as useful examples for change, in addition to certain innovations.
The Arab region witnessed a policy shift from targeting only the poorest population to also including the “missing middle”, such as informal workers who often did not receive any social protection benefits prior to the pandemic because they were not deemed eligible (for example Egypt, Jordan and Morocco). This shed light on the extent to which this group of workers was neglected pre-COVID-19 and the connected structural challenges.
Arab countries excelled in using innovative technologies for the delivery of social protection programmes, especially cash transfers that were delivered to beneficiaries in just a few days through newly created outlets, e-wallets and digital registration. The unique constraints imposed by COVID-19 inspired innovations in the design and delivery of education, health and social protection, which not only protected access to services under extraordinarily challenging conditions, but also facilitated more inclusive outreach.
In many Arab countries, the pandemic accelerated stronger partnerships and greater collaboration between different stakeholders. This was especially demonstrated, among others, through collaborations between different governmental parties at the national level, the sharing/using of databases of beneficiaries (civil registry, vital statistics, tax and social insurance database) and e-platforms such as Government-to-Government (G2G) sites in Egypt.
The Arab region is the most unequal region worldwide. In 2020, 58 per cent of national income was accrued by the top 10 per cent, and only 8 per cent was accumulated by the bottom 50 per cent.
Poverty is intergenerational: once a family falls into poverty, it is likely to remain there for a few generations.
Gender inequality in the Arab region has been systematically above the global average, with an estimated 179 years needed to close the gender gap compared with 142 years globally.
Conflict is an impediment to reducing inequality: the direct cost of conflict incurred by Iraq, Libya, the Syrian Arab Republic and Yemen, and the indirect spillover effects on neighbouring countries, were estimated at $752 billion between 2011 and 2015.
Economic growth alone will not solve this problem. On the contrary, non-inclusive growth could exacerbate inequalities without strengthening economic participation for all.
The political instability that swept through the Arab region in the early 2010s was a direct result of extreme inequality. Although each country had its unique experiences and citizen demands, the popular uprisings all aspired to justice, equality and better living standards. The Arab region is caught in a vicious circle of conflict, with devastating effects on its ability to consolidate development gains. The root causes and drivers of conflict in the region, combined with their immediate and long-term impact, are likely to perpetuate further conflict and exacerbate inequality. The breakdown of economic organizations and business networks, the degradation of State institutions, and the fragmentation of society will take generations to remedy, should conflict cease today. Figure 1 shows the cyclical impact of conflict.
The Arab region is the most unequal region worldwide. Inequality is a dynamic phenomenon that is constantly changing and interacting with social, economic and cultural factors operating at all levels across the region. Inequality negatively affects progress towards the SDGs and poverty reduction through inefficient resource allocation, wasted productive potential, a high dependency ratio, and impaired institutional development. The present section provides an overview of some of the inequalities that are evident in the Arab region.
At the end of 2019, when the COVID-19 pandemic started, average wealth in all the Arab subregions had begun increasing owing to rising valuations in the commodities and securities markets. By the end of 2020, however, Arab nationals’ wealth had declined, notably in the GCC subregion. While mean wealth dipped by 8 per cent in Arab low-income and conflict-affected countries, it declined by 13 per cent in GCC countries compared with an average fall of 10 per cent regionwide (figure 2).
The Arab region is the only region worldwide with increasing poverty rates in the 2010s. The comparative performance of the Arab region has been declining significantly. For example, in 2010, the Arab region had roughly the same poverty rate as Latin America (6.9 per cent and 6 per cent, respectively). However, by 2019, the Arab region had triple the poverty rate. The problem of rising income poverty has been particularly severe in Arab conflict-affected countries (figure 3).
The Arab region has registered some of the highest levels of income inequality globally (figure 4). In some countries, the top 10 per cent of earners account for more than 60 per cent of national income, compared with 52 per cent globally, 55 per cent in Latin America, and 36 per cent in Europe.
The Arab region needs around 179 years to close its gender gap, which was one of the highest gender gaps worldwide in 2021 at 61 per cent compared with 67.7 per cent globally.
The Arab region has been the lowest performing group worldwide in the “economic participation and opportunity” subindex of the Global Gender Gap Index, which has affected its performance in the entire Index. Over the period 2006-2021, the region managed to close an average of 40.7 per cent of the gap in this subindex, which is relatively low compared with the global average of 58 per cent.
The COVID-19 pandemic has highlighted deep and longstanding inequalities across the Arab region.
Although the region was already significantly unequal, the pandemic deepened and accelerated those inequalities, hitting the poorest and most vulnerable communities hardest.
The pandemic pushed an additional 16 million people into poverty, increasing the number of poor in the region to over 116 million, almost a quarter of the population.
People in the informal sector, vulnerable workers, women, young people, less-educated workers and persons with disabilities suffered the most from job losses during the pandemic.
Temporary informal sector labour accounted for the greatest proportion of net job losses in the Arab region in 2020. At the same time, workers with permanent jobs in tele-workable occupations were largely spared from unemployment, thus widening existing inequalities between those in the formal and the informal sectors.
The Arab region was already significantly unequal, but the pandemic deepened and accelerated these inequalities. At the same time, existing social, political and economic inequalities amplified the impact of the pandemic. The outbreak of COVID-19 caused drastic changes in jobs, education, economy, welfare systems and social life in the region, hitting the poorest and most vulnerable communities hardest. It also revealed the fragile safety nets that left vulnerable individuals, families and communities bearing the brunt of the crisis.
Globally, the wealth of the world’s 10 richest men has doubled since the pandemic began, but the income of 99 per cent of people has dropped because of the COVID-19 pandemic. Widening economic, gender and racial inequalities, in addition to inequalities between countries, are tearing the world apart. This is not by chance, but by choice: “economic violence” is perpetrated when structural policy choices are made for the benefit of the richest and most powerful individuals. This causes direct harm to everyone else, especially the poorest groups, women and girls, older persons, and persons with disabilities. Inequality contributes to the death of at least one person every four seconds. However, economies can be radically redesigned to be centred on equality.
In the Arab region, micro, small and medium enterprises (MSMEs) in the informal economy were particularly vulnerable to the economic impact of the virus. Consumers were demanding and spending less, leading to decreasing revenues, liquidity problems, reduced output, and layoffs. Arab countries showed characteristics that made them more susceptible to deeper economic and social challenges compared with other countries, including dependency on the informal sector for economic activity and employment, lower shares of tele-workable jobs, and higher numbers of informal sector workers. Reducing informality will help reduce inequalities in the long run through stronger social welfare safety nets, better enforcement of laws and policies, increased revenue yields, easily administered regulations, and enhanced economic growth.
Social protection coverage differs among men and women in the region, despite the positive change witnessed recently. For example, the gender distribution of old-age pensioners covered by social insurance schemes has been systematically low for women when compared with men. According to available data in four Arab countries, old women covered by pensions ranged between 14 per cent in Tunisia, 17 per cent in Jordan, 37 per cent in Kuwait, and 25 per cent in Bahrain, compared with 86, 83, 63 and 75 per cent, respectively, for men. This is largely a consequence of women’s absence from the workforce in the preceding decades (figure 6).
To tackle the pandemic, Arab Governments had to swiftly change gear to ensure fiscal support for those without any form of social protection. Within the first six months of the pandemic, 189 new social protection measures were introduced. By September 2021, the total fiscal response to the COVID-19 crisis in the Arab region was $94.8 billion, which was equivalent to approximately 2 per cent of the region’s GDP in 2020. This is considerably low compared with the global average fiscal response to the pandemic, which was 22 per cent of GDP. However, of this $94.8 billion total fiscal response in the Arab region, an impressive 18 per cent was allocated to various forms of social protection programmes, such as cash transfers. In relative terms, this is double the global average of social protection spending as a share of the total fiscal response, which is estimated to be just 9 per cent.
The factors driving inequality in the Arab region include demographic dynamics, poor education, digital divides, weak institutions, corruption and lack of transparency, data deficits, and unaffordable housing.
Around 51 million people in the Arab region are suffering from undernourishment, with an alarming increase in the "triple burden of malnutrition" consisting of undernutrition, overweight and obesity, and many suffering from micronutrient deficiencies.
Spatial disparities are wide in the region, with 75 per cent of those living in extreme poverty residing in rural areas.
High inequality of opportunities in education is determined by family circumstances, including parental income, educational attainment, and community characteristics.
Access to education is affected by low fixed-broadband penetration, which stands at 8.8 per cent, compared with a world average of 12.1 per cent.
People in the Arab region are optimistic about the future of social and economic equality in their countries.
Around 60 per cent of people in Kuwait and 55 per cent Oman think that current levels of social and economic equality are high; and 55 per cent and 50 per cent, respectively, think social and economic equality levels will be high in five years. In contrast, only 2 per cent of people in Lebanon think that social and economic equality currently exist, and 6 per cent think there will be more social and economic equality in five years.
Job opportunities for young people are the preferred option to improve social and economic equality in Egypt, Iraq, Jordan, Kuwait, Mauritania, Morocco, Oman, the Sudan and Tunisia.
Unlike other countries, Lebanese people think that the best way to reduce social and economic inequality is by combatting corruption.
In people’s opinion, top government actions to improve employment opportunities in the region are the creation of more jobs in the private sector, and the provision of more funding for micro and small enterprises.
At the national level, Lebanese respondents were the least optimistic when rating social equality in their country, with 67 per cent saying that there was full inequality. Iraqi respondents were the second least optimistic, with 49 per cent saying that there was full inequality in their country. In contrast, people in Kuwait were the most optimistic, with 60 per cent saying that there was full equality in their country. Omani respondents were the second most optimistic, with 55 per cent saying that there was full equality in their country (table 1).
At the regional level, 47 per cent of respondents said that there would be more social and economic equality in the region in the next five years: 26 per cent felt that there would be a lot more equality, and 21 per cent felt that there would be some more equality. Around 19 per cent of those polled felt that there would be the same level of social and economic equality in the next five years, and 27 per cent said that there would be less or a lot less equality.
At the national level, Kuwaiti respondents were again the most optimistic with regard to social and economic equality in the next five years, with 55 per cent expecting that there would be a lot more social and economic equality. Omani respondents were the second most optimistic, with 50 per cent expecting a lot more social and economic equality. In contrast, Lebanese respondents were again the most pessimistic, with only 6 per cent expecting a lot more social and economic equality in the next five years. Iraqi respondents were the second most pessimistic, with 17 per cent expecting a lot more social and economic equality (table 2).
In Egypt, respondents had an optimistic perspective, with 28 per cent saying that they currently had full equality, and 39 per cent felt that they had some equality. Regarding equality in the next five years, 29 per cent were expecting a lot more equality, and 28 per cent were expecting some more equality.
Iraqi respondents had a pessimistic perspective, with only 6 per cent saying that they currently had full equality, and 24 per cent saying that they had some equality. Regarding perceptions of equality in the next five years, 17 per cent were expecting a lot more equality, and 14 per cent were expecting some more equality.
In Jordan, 16 per cent of respondents felt that they currently had full equality, and 46 per cent felt that they had some equality. Regarding perceptions of equality in the next five years, 20 per cent were expecting a lot more equality, and 15 per cent were expecting some more equality.
Kuwait respondents had an optimistic perspective, with 60 per cent saying that they currently had full equality, and 18 per cent feeling that they had some equality. Regarding perceptions of equality in the next five years, 55 per cent were expecting a lot more equality, and 12 per cent were expecting some more equality.
Lebanese respondents had an extremely pessimistic perspective, with only 2 per cent saying that they currently had full equality, and 13 per cent feeling that they had some equality. Regarding perceptions of equality in the next five years, 6 per cent were expecting a lot more equality, and 19 per cent were expecting some more equality.
In Mauritania, 17 per cent of respondents felt that they currently had full equality, and 36 per cent felt that they had some equality. Regarding perceptions of equality in the next five years, 20 per cent were expecting a lot more equality, and 28 per cent were expecting some more equality.
In Morocco, 14 per cent of respondents felt that they currently had full equality, and 40 per cent felt that they had some equality. Regarding perceptions of equality in the next five years, 23 per cent were expecting a lot more equality, and 29 per cent were expecting some more equality.
In Oman, 55 per cent of respondents said that they currently had full equality, and 32 per cent felt that they had some equality. Regarding perceptions of equality in the next five years, 50 per cent were expecting a lot more equality, and 15 per cent were expecting some more equality.
In the Sudan, 14 per cent of respondents said that they currently had full equality, and 29 per cent felt that they had some equality. Regarding perceptions of equality in the next five years, 18 per cent were expecting a lot more equality, and 19 per cent were expecting some more equality.
In Tunisia, 4 per cent of respondents said that they currently had full equality, and 20 per cent felt that they had some equality. Regarding perceptions of equality in the next five years, 18 per cent were expecting a lot more equality, and 28 per cent were expecting some more equality.
Youth unemployment in the Arab region has been the highest worldwide for the past 25 years. It is 3.8 times higher than of adult workers.
Youth unemployment in the region is 26 per cent compared with a global average of 12.8 per cent.
About 85 per cent of working young people in the region are in the informal sector.
The number of unemployed persons in the region is expected to rise from 14.3 million in 2019 to 17.2 million in 2030, even without taking into account the impact of the COVID-19 pandemic and the substitution effect of automation.
Inequality in employment is seen across generations. Persistent youth unemployment in the region indicates that young people face unique barriers over and above those faced by other workers.
Youth unemployment (people aged 15-24) is the most significant socioeconomic challenge facing the Arab region. Youth unemployment in the region has been the highest worldwide for the past 25 years, estimated at 26 per cent compared with a global average of 12.8 per cent. Youth unemployment in the region is 3.8 times higher than total unemployment. Moreover, an estimated 85 per cent of working young people are in the informal sector. The Arab region is also characterized by the largest gender gaps in labour force participation and employment worldwide. Within the 15-24 age group, the female labour force is 80 per cent smaller than its male counterpart.
Inequality in female youth unemployment is evident between Arab countries and within them. On average, women are 2.6 times more likely to be unemployed than men. Female youth unemployment in the region, which is the highest worldwide, stands at 40 per cent.
The pandemic accentuated unemployment among women. Women’s jobs were particularly hard hit, as they are more likely to work in the informal economy and service sectors that were most affected by the lockdowns.
Inequality in employment is witnessed across generations in the region. The youth unemployment rate in the Arab region is 3.8 times higher than that of adult workers, highlighting that young people face unique barriers over and above those faced by other workers.
While school and university enrolment rates have increased, the quality of education has deteriorated significantly, resulting in high unemployment rates among young, new college graduates. This unique phenomenon among those with high levels of educational attainments is representative of the region. Training systems and curriculums are not in line with the needs of the labour market, leading to a significant skill mismatch.
A distinguishing feature of the Arab region’s weak economic performance is high unemployment rates and a persistent lack of success in creating enough jobs for young people. High youth unemployment rates are largely due to a lack of job opportunities, but also to barriers to entering the labour market. The low availability of high-skilled jobs and the low value placed on skills gained through vocational training are also significant factors.
There are five broad reasons why the formal private sector in the Arab region is not creating enough decent and inclusive jobs. Understanding the following reasons is central to creating practical solutions to reduce unemployment:
Low-productivity economies with wide deficits in youth participation and gender equality, a large informal sector, and a limited role of the formal private sector, particularly in employment creation.
Despite relatively high GDP growth rates in recent years prior to the pandemic, opportunities for aggregate productive and decent employment fell short. Jobs were mainly created in informal low value-added production and the public sector, which also added to political polarization. Consequently, aggregate labour productivity and real wages stagnated or dropped in real terms.
The low inclusivity of women in the labour market. The main difference between the employment profile of the region and the rest of the world is an extremely low women’s labour force participation rate, which is caused by weak job creation in Arab economies, structural constraints, attitudinal barriers, and gender dynamics that discriminate against women.
The challenge facing many Arab countries is not so much a bloated public sector, but rather the failure of public sector policies to achieve successful economic structural transformation and diversification. This failure pressures many Governments, especially in oil-rich economies, to create inclusive public employment opportunities, resulting in limited jobs in the formal private sector.
Conflicts in several Arab countries have damaged the region’s attraction to foreign investment, thus undermining prospects for sustainable development.
A combination of integrated policies is required to reduce inequality.
It is possible to achieve equality that benefits both “the haves” and “the have nots”.
To reduce inequality in employment, it is necessary to follow a three-pronged approach: promoting solidarity, delivering visible impact, and securing credibility and trust.
A solidarity fund should be established to facilitate shared responsibility among the rich and the poor.
A new paradigm shift in government policies and governance is needed to address inequalities in the region, which includes a combination of integrated policies and a financing plan for reducing inequality that takes into account the intersectionality of inequalities.
The seriousness of the youth unemployment situation in the region requires the urgent application of a multitude of alternative innovative approaches, based on the good practices of other communities, countries and regions.
The present chapter applies the below model to youth unemployment, and proposes practical solutions to help reduce inequality in youth unemployment (figure 22).
Before proposing practical solutions to translate the above policies into action, it is necessary to understand the skills available in the market and the demand for jobs. To facilitate this, ESCWA has developed the Skills Monitor, which comprises big data from online job openings in the Arab region. This is a data-and artificial intelligence-driven tool, built inhouse for the collection, processing and analysis of online job openings in the Arab region.
"A triangular partnership approach is a key transformative policy, including public-affluent-poor (PAP) partnerships and public-business-citizen (PBC) partnerships. PAPs, embodied in mechanisms such as the creation of a societal solidarity fund that targets the poor and creates opportunities for upward mobility and economic benefits, entrepreneurial ventures and innovation, can help assuage growing social tensions between the rich and poor. PBCs, reflected in mechanisms such as shared ownerships in privatized and transformed public economic activities, create economic opportunities for all, and can help in mitigate the growing economic conflict between businesses and citizens."
Rola Dashti, Executive Secretary of ESCWA
The regional coalition should be a catalyst to bring together private sector leaders and organizations to make commitments to reduce inequalities among young people in the job market through creating learning opportunities, training, internships, and mentorship programmes.
Through ESCWA governmental platforms, the coalition will facilitate dialogue between the private sector and Governments, especially ministries of labour and social affairs in the Arab region. It will also facilitate dialogue between young people seeking jobs and the private sector, so as to allow for an intergenerational dialogue on the needs of the job markets, especially the skills needed in the new future of work.
Key gaps in financing continue to undermine the ability of Governments to create opportunities for young people and reduce unemployment.
At the regional and national levels, the following alternatives can provide pathways to end the pandemic of inequality.
The Arab region continues to struggle with outdated bureaucratic structures and widespread corruption, which hinder institutional effectiveness and erode accountability. Public institutions play a central role in economic and social development, because they shape the incentives of key economic actors in society, influence investments in physical and human capital and technology, and impact the organization of production. Weak institutions are often the main reason why countries fail.
The present report discussed existing inequalities and disparities in the Arab region, ranging from inequality in income, opportunities, wealth, gender and climate change. It highlights that heightened social and economic inequalities are potential seeds of discontent, and provide fertile ground for unrest and tension by leaving millions of young people with unrealized potential and ambitions. Most importantly, inequality hinders national efforts on leaving no one behind, and undermines the realization of the 2030 Agenda.
In a time of growing inequality and social exclusion, the accumulation of economic and social tensions, particularly exacerbated by the greatest cost-of-living crisis in the past 25 years, have the potential to significantly increase disaffection and alienation among Arab populations, who continue to face unemployment, poverty, exclusion and social deprivation.
Inequality is the result of policy choices. Reducing inequalities requires reasserting the role of the State as the guarantor of equal economic and social rights, and implementing policies to equitably redistribute resources. This is a political process first and foremost. At the national level, it necessitates structural reforms and changes in economies and institutions, as well as social and legal changes to promote equality and social inclusion. The present report is a step forward in that process. It is necessary to bring all sectors of society together across the region, by forging partnerships between Government, business, trade unions, international organizations, and civil society.
For this shift to occur, there is a need to utilize the enormous advantages in the Arab region: people with talent, energy and enthusiasm; strong networks of family and kinship relationships; abundant natural resources; a strategic location; and a common historical, cultural and spiritual heritage, bound by the Arabic language and linked through geographical proximity.
Implementing the actions outlined in the present report is fundamental to achieving the positive differences that policy can make to the lives of people in Arab countries. The practical solutions presented in the report are realistic yet ambitious, and set a course for real change in the areas that matter most to Arab citizens to guarantee a better quality of life for all.